Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Closing Entries

Financial Accounting

3. Accrual Accounting Concepts

Closing Entries

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Multiple Choice

In the process of preparing financial statements and closing entries, which financial statement is typically prepared last?

Trial Balance

Income Statement

Balance Sheet

Statement of Retained Earnings

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Verified step by step guidance

Understand the sequence of preparing financial statements: Financial statements are typically prepared in a specific order to ensure accuracy and logical flow. The order is: Income Statement, Statement of Retained Earnings, Balance Sheet, and then the Cash Flow Statement.

Recognize the purpose of each statement: The Income Statement summarizes revenues and expenses to calculate net income. The Statement of Retained Earnings uses net income to determine changes in retained earnings. The Balance Sheet provides a snapshot of the company's financial position at a specific point in time.

Identify dependencies between statements: The Balance Sheet relies on information from the Statement of Retained Earnings, which in turn depends on the net income calculated in the Income Statement. This dependency determines the preparation order.

Understand why the Balance Sheet is prepared last: Since the Balance Sheet includes retained earnings (a component derived from the Statement of Retained Earnings), it must be prepared after the Statement of Retained Earnings is finalized.

Conclude the sequence: The Balance Sheet is typically prepared last in the process of preparing financial statements because it consolidates information from prior statements to present the company's financial position comprehensively.